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Civil Petition for Special Leave to Appeal No. 284‑K of 1984, decided on 2nd September, 1985.

‑‑‑Art. 185(3)‑‑Sales Tax Act (III of 1951), Ss. 3(4) & 5(1) and Notification, dated 1‑7‑1981‑‑Leave to appeal‑‑Question whether powers of Sales Tax Officers conferred upon Assistant Collectors, Central Excise, under S. 5(1) of Sales Tax Act, 1951, by Notification, dated 1‑7‑1981, cannot be exercised by them retrospectively‑‑Point of law being of general importance and likely to affect a large number of cases leave to appeal granted to consider such question.

Abul Khair, Advocate‑on‑Record for Petitioner.

Nemo for Respondents.

Date of hearing: 2nd September, 1985.

.‑‑Petitioner Company engaged in the manufacture of electric bulbs was served with a notice, dated 9‑9‑1981 issued by the Deputy Collector, Central Excise respondent 2, to show cause why action should not be taken against the Company under section 3(4) of the Sales Tax Act, 1951 read with the rules framed there under for having evaded payment of sales tax to the extent of Rs.7,82,328.86 on the manufacture of Glass‑Shells and cleared for their own consumption during the period from October 1977 to March 1981.

Petitioner in reply submitted, inter alia, that Glass‑Shell is a vital and indispensable raw material for the manufacture of electric bulbs which is the end‑product and no sales tax is payable thereon. Petitioner further challenged the authority of the Deputy Collector, Central Excise to issue the notice of demand or make the recovery.

The Deputy Collector Central Excise, however, by the order, dated 25‑6‑1983, rejected all the pleas raised by the petitioner and ordered recovery of the aforesaid amount from the petitioner, and further imposed penalty of Rs.50,000 for the violation of the rules.

Petitioner appealed against this order and also challenged the said order in a Constitutional Petition in Sind High Court on the pleas mentioned above. Learned Judges of the Division Bench who heard the Constitutional Petition rejected these pleas and dismissed the Petition in limine by the judgment, dated 24‑4‑1984.

Mr. Abul Khair Ansari, learned counsel appearing in support of this petition for leave to appeal from the judgment of the High Court submits that since Assistant Collector of Customs/Central Excise were conferred the powers of Sales Tax Officers with effect from 1‑7‑1981 under notification C. No. 667‑C (CE)/81, issued by the Central Board of Revenue on 1‑7‑1981, the Deputy Collector, Central Excise and Land Customs or the Assistant Collector, Central Excise and Land Customs was not competent to recover sales tax for the period prior to 1‑7‑1981.

This plea was noticed by the learned Judges of the High Court but was rejected by them, to state in their own words, for the reasons "firstly, that provisions relating to machinery providing for recovery of taxes are to be construed liberally", and, secondly, the order by which the amount of tax was adjudicated to be due was passed on 25th June, 1983. The demand could not be deemed to have arisen till after the order of adjudication was made. On perusal of the above referred Circular No. 7 we are also of the opinion that the Assistant Collector alone had exclusive jurisdiction to serve the impugned notice of demand after 1‑7‑1981, pursuant to the order/ adjudication made on 25‑6‑1983 by the Deputy Collector."

In order to appreciate the submission advanced by the learned counsel for the petitioner reference may firstly be made to the aforesaid notification, dated 1‑7‑1981. It reads as follows:‑

Government of Pakistan

Central Board of Revenue

Islamabad, the Ist July, 1981.

Subject:

In exercise of the powers conferred by subsection (2) of section 5 of Sales Tax Act, 1951 (III of 1951), and in supersession of Sales Tax Circular No. 3 of 1981, dated the 17th May, 1981, the Central Board of Revenue is pleased to appoint the officers specified in column (2) of the table below to exercise the powers of the officers specified in column (3) of that table within their respective areas of jurisdictions:

(1) (2) (3)

(1) Collector of Customs/ Commissioner of Sales Tax.

Central Excise

(2) Deputy Collector of Cus‑ Inspecting Assistant Commissioner

toms/Central Excise. of Sales Tax and Appellate Assis

tant Commissioner of Sales Tax.

(3) Assistant Collector of Sales Tax Officer.

Customs/ Central Excise.

2. The officers specified in column (2) shall have exclusive jurisdiction under the said Act with effect from 1‑7‑1981.

3. Notwithstanding anything contained in this order the officers specified in subsection (1) of section 5 of the said Act shall continue to exercise the powers under the said Act in respect of all assessments (including collection of tax against demand raised in pursuance of such assessments) pending with such officers on the first day of July, 1981.

(Sd.)SHAHID BASHIR,

Second Secretary.

Learned counsel for the petitioner submitted that before 1‑7‑1981 the entire administration of sales tax was under the jurisdiction of Income Tax Authorities who were designated under subsection (1) of section 5 of the Sales Tax Act, 1951, as Sales Tax Officers, etc. and it was only by virtue of the aforesaid notification, dated 1‑7‑1981 that the powers of Sales Tax Officers were conferred on Assistant Collector of Customs/Central Excise by virtue of the powers conferred by section (2) of section 5, and it was provided in the said notification, dated 1‑7‑1981 that notwithstanding anything contained therein, the officers specified in subsection (1) of section 5 of the said Act, namely, Income Tax‑cum‑Sales Tax Officers, shall continue to exercise the powers under the said Act in respect of assessments (including collection of tax against demand raised in pursuance to such assessments pending with such officers. According to learned counsel, therefore, the powers conferred upon the Assistant Collectors of Customs/Central Excise cannot be exercised by them retrospectively. Learned counsel further submitted that even otherwise unless notification by express terms is made retrospective, it cannot be deemed and construed to be retrospective in operation.

The point of law raised by the learned counsel is of general importance that is likely to affect a large number of cases. We, therefore grant leave to appeal and allow the petition. Security Rs.2,000.

Appeal will be heard on the present record, but it is open to the parties to file additional documents, if any.

Learned counsel for the petitioner requested that pending disposal of the appeal respondents be restrained from making the recovery of the tax. We would not like to pass an ex parte order and, therefore, issue notice of Civil Miscellaneous Petition No. 249‑K of 1984 to respondents and also the learned Deputy Attorney‑General for the date in office.

M.Y.H. Leave granted,

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